Lock in business term deposit rates before potential RBA cuts

Businesses looking to secure strong returns on their cash reserves may want to act sooner rather than later. The Reserve Bank of Australia (RBA) has held the cash rate steady at 3.60% since August, but economists are anticipating at least one more rate cut in the coming months.

Why does this matter for business term deposits?

Term deposit rates are closely linked to the RBA cash rate. When the cash rate falls, banks often reduce the interest offered on fixed-term deposits. Locking in a term deposit now could mean capturing a higher rate before cuts arrive.

The timing could be especially relevant given recent economic signals. Consumer confidence dropped to a 12-month low in October, according to the latest ANZ-Roy Morgan consumer confidence survey, highlighting cautious sentiment among households and businesses.

Business investment remained subdued in September 2025, with firms showing limited appetite for major spending. Westpac senior economist Mantas Vanagas  says businesses appear to be waiting for a recovery in domestic demand before committing to significant investments.

This may lead to higher demand for term deposits as companies seek secure places to park cash if spending continues to remain subdued. This increased demand could prompt banks to adjust rates independently of the RBA, potentially lowering term deposit rates sooner than expected. 

For businesses, delaying could risk missing out on the higher rates currently available.

When the outlook’s unclear, safety still pays

Short- to medium-term term deposits remain a low-risk way for businesses to earn interest on idle cash. You can choose terms ranging from one month to five years. Minimum deposits usually start at $1,000, making them accessible for businesses of all sizes. Interest is typically paid monthly, annually, or at maturity, providing flexibility to match cash flow needs.

Now could be an ideal window for businesses

Given the likely RBA rate cut and potential market pressures, now could be an ideal window for businesses to secure a term deposit at a competitive rate. Acting early offers certainty over returns in an environment where rates may decline and economic sentiment remains subdued.

As at 16 October 2025, Mozo’s database shows short- and medium-term deposits are offering some of the highest returns. Three- and six-month terms are particularly competitive, with top rates of 4.20% p.a. to 4.35% p.a., while one- and two-year terms also offer strong returns of up to 4.20% p.a.. Even longer-term deposits, such as five-year terms, can yield up to 4.30% p.a., highlighting opportunities for businesses to lock in higher rates across a range of durations.

Businesses considering term deposits can compare offerings across banks, including major institutions and smaller lenders, to find the best rates and terms for their needs.